Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points below your present rate? That could have been true years ago, but with the fact that refinancing has been costing less over the last few years, it's a good time to think about a new mortgage! Refinancing has some advantages that often make it worth the up-front cost a few times over.
When you refinance, you might be able to lower your interest rate and monthly mortgage payment amount, sometimes considerably. You also may be given the option of tapping into the equity in your home by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build your home equity faster by switching to a shorter term mortgage.
Expenses and Fees
Of course, you'll have to pay for the process of refinancing. You will have to pay the same kinds of expenses and fees as with your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might think about paying points to reduce your interest rate. Your savings on the life of the loan could be substantial if you have paid up front about 3% of the new loan total. Please consult with a tax professional before acting on advice that these points paid may be deducted on your taxes.
Another thing about taxes is that if you lower your interest rate, of course you'll also be lowering the interest amount that you can deduct on your taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at 562 320-0510.
Most borrowers find that the monthly savings balance out the up-front expenses of refinancing. We will help you determine what mortgage program is best for you, considering your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing may have on your taxes. Call us at 562 320-0510 to get started.
Curious about refinancing? Give us a call: 562 320-0510.